Lots of regulatory decisions are being made: Recent rulings include the Federal Communications Commission (FCC)'s February decision to deregulate the technology completely in the U.S., removing the wholesale-priced access competitors have (until now) been granted to incumbent local loops (see Powell Loses FCC Vote). In Europe, governments are gearing up to comply with a July deadline to harmonize broadband expansion throughout the EU, and to ensure that incumbents open their networks to competition.
What these and other measures fail to take into account, according to the report, entitled "Regulating the Telecom Markets," is that mass deployment of broadband infrastructure is stuck on the basics. A ruling may be in place, but getting the fiber to implement new services remains problematic in many cases.
For example, according to report co-author Ross Pow, Analysysys identified more than 300,000 business sites in the U.K. last year that could justify using fiber, but that didn’t have access to it.
Regulation may even hinder the process of broadband rollouts. That's because the basic infrastructure, the ducts and cables on which broadband services rely, aren't always easily provisioned. Ducts and cables are constrained by geography, architecture, and security considerations, and are very civil engineering-intensive, the report states.
In many cases, these forces converge to hinder the introduction of new links. While a ruling may open the way for different companies to build multiple competing networks in a single location, that often isn't feasible: "For certain geographical areas it’s only economically viable to have only one access run," Pow says. "Where competition delivers the infrastructure, that’s great. But regulators can’t rely on that happening."
So what should regulators do when they realize that competition is not going to help bring broadband to an underserved area? Pow says there are a number of ways they can help bridge the technology gap:
- Work through direct subsidies to companies willing to build in underserved areas.
- Partially fund a project, promising a certain amount to a company willing to build the infrastructure. In these cases, the government would typically put a bid out on the project.
- Allow one company to act as a heavily regulated quasi-monopoly.
- Cut out the middlemen and lay the fiber themselves.
- Deploy broadband aggregation, in which all public services in an area band together to buy their broadband services from one provider.
Pow envisions a model for broadband services in which broadband applications represent the upper layers, while ducts and cable reside at the base. "The main thrust of our report is that competition is great at increasing innovation," he says. "At the lower layers, however, the economics of broadband are more like [those of] a utility… It’s about basic infrastructure."
Although it’s still unclear what the best method may be to entice businesses to build out the lower layers, Pow says that the FCC's recent deregulation order certainly isn't it (see Will RBOCs Spend More on Broadband? and Covad CEO Sticks to His Guns). "Where infrastructure is already there, it should be made as widely available as possible," he says. "Basically, what you need is to ensure competition at the higher layers by providing access to the lower layers on an equitable basis."
— Eugénie Larson, Reporter, Light Reading